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Monday, December 20, 2010

The Trial of the Louisville 5

It's bad enough Rick Pitino was out carousing on his wife with some Louisville hussy, but now, Norton Hospital in Louisville is bringing some unnecessary attention upon the Possibility City. The WSJ reported that the "starting five" on the Norton Hospital Spine Team is being investigated for performing the third most spinal fusions on Medicare patients between 2004-2008. In addition, they are being singled out for being among the largest recipients nationwide of payments from industry giant Medtronic. One would think that at this point the Evil Empire would stop hiding behind Mama AdvaMed's skirt, claiming their innocence. Unfortunately for Darth Vader, the court of public opinion is all that matters. In the first nine months of 2010, the Dream Team received an estimated $7 million from MDT. LeBron, Dwayne and Chris would be proud, next thing you know, the Louisville 5 will be hanging in South Beach on the Heat's turf. Medtronic is defending itself by stating that the payments are mostly royalties that they earned for designing one of its best selling products.

The overuse of hardware has haunted the spine industry for many years, driving up the cost of delivering healthcare. Yet, in defense of Medtronic, the public must be made aware that without clinician input, companies would not be able to deliver products that improve the public's quality of life. At this juncture, the only method of informing the patient of any financial interest in the implants is when a consent form is signed just prior to surgery. Is there any better way to address this? Does anyone think a patient cares about disclosure when they are in pain, and are looking for a remedy? As for product development, TSB has never met an engineer that has operated on a patient, even though he has worked with few that thought they did. So how does a company validate a product in development? Regardless, the potential for illicit kickbacks does exist. Abuses in consulting agreements became prevalent when companies like Blackstone Medical made it sport. Of course, someone had to be the Gaetan Dugas, aka as "Patient Zero," spreading the consulting disease like the AIDS virus. That honor will always be bestowed upon the Platinum Plus of the spine world.

The most interesting aspect of this report is that spinal fusion went from costing Medicare $343 million in 1997 to $2.24 billion in 2008, a 400% increase. Spinal implants have become exceptional profit generators, at least to this point. And up until this point, rarely did we see an insurance company deny a subscriber, medical care due to pain. But it has become evident that insurance carriers are becoming much more discerning in their approvals, based on the recent BCBS of NC fiasco. What should be troubling is the Workers' Comp study that was published in the Journal of Spine which showed that patients that had a spinal fusion were less likely to return to work within two years post-op, than patients that didn't have invasive surgery for similar diagnoses, with a 27% revision rate for that that had primary fusion. But let's be honest Workers' Comp patients are some of, if not the worst patients to deal with. Rather than beat this issue to death, which it has been by the government, the DOJ (poor job), and even on this blog site, this is what TSB proposes;

A thorough investigation into the products that these surgeons have actually worked on by subpoenaing all of Medtronics and the Louisville 5's records.

Subpoena the IP on these products and see if the Louisville 5 has any ownership in designing these products.

Subpoena all of Medtronic's record to identify if they were paying the Louisville 5 royalties on the implants they were using.

Subpoena Norton's Hospital's pricing with Medtronic and compare it to a national average to see if Medtronic is using the surgeons to obstruct fair and equitable implant pricing compared to other facilities, by demanding the use of Medtronic products when there are other products that are substantially equivalent and can be purchased at a lesser cost to the facility. This would be the perfect opportunity for the Louisville 5 to show that it is a team player and start their own POD.

Linda Richmond use to start her skit every Saturday Night by asking her viewers, "can we talk?" One of TSB's followers had the most interesting comment about this article stating, "You gotta take out the trash, if you're gonna clean this thing up." With Hawkins heading for the hills, it looks like the Evil Empire will be looking for a new leader. As "the Gipper" used to say, "forces of good ultimately rally and triumph over evil." TSB wants to know what our readers think?

86 comments:

Articles like this are never good for the industry and all stakeholders, including hospitals, insurance companies, etc. Articles like these demonize and implicate people's activities and paint them in a bad light. I know some of the doctors well in this article and it is BS to "connect the dots" the way the WSJ does between their surgery rates, dollars and Medicare. Let's not forget some basic facts:

1) There are approximately 5,000 orthopedic and neuro surgeons in the US who perform spinal surgery. Only a fraction of the surgeons ever get discussed in articles like these and everyone gets painted in a bad light - it is wrong & unfair because the surgeons don't have a voice as they are not news reporters, etc. Who speaks for them? News reporters only care about their stories & angles and very rarely present both sides of the story.

2) There are millions of patients each year that do not undergo surgery, but that manage their pain through physical therapy, NSAIDs and other forms of conservative care. Unfortunately, hundreds of thousands of patients require surgery (after consultation with their physician - let's remember this is elective surgery most of the time) and no one ever talks about the millions of patients treated over the years who are better because of surgery. Not everyone can have a perfect outcome all of the time.

3) There is more Level I evidence supporting the effectiveness of spine surgery than in any other area of orthopedics, including hips & knees. I am not talking simply about "survivorship" - I am taking about all forms of safety, efficacy & QALYs.

Now a couple of opinions:

A) God save those welcoming the rationing of medicine and specialty care, especially things like spine surgery. Go to to other countries where healthcare is rationed and ask those patients where they go for their treatment options.

B) The surgeon community needs to get its act together like it did with BCBS North Carolina and form a PAC / Lobby Group (more powerful than NASS please) to represent their voice at the state & federal levels. This kind of unanswered, unabated attack will only further weaken the diffusion of power & influence in the surgeon community.

C) Articles like these which attempt to examine waste should not equally exonerate those that force the system to function in the manner that it does. I think other things need to be put in context like malpractice insurance, tort reform, and the power of the insurance companies to do what they want & when they want.

D) The government wants to cut wasteful spending? Start with stop spending on wars, and cut spending to the TSA & the Dept of Defense. All the jokes about $10,000 screwdrivers & $1B jets make the healthcare cost issue seem pretty trivial. I know the stimulus spending on infrastructure is supposed to be creating jobs, but spend money on increasing physician CMS reimbursement, not cutting it.

I don't think anyone has all the right answers, but the one thing I know for sure is that neither does the WSJ or New York Times - most of the time they are full of misdirection & misinformation, with an underlying premise of "facts".

Yes, I agree with the comment above and would love to be a fly on the wall when that WSJ reporter eventually comes crawling to their local spine surgeon begging for the best treatment possible to ease their leg and back pain. I hope that when this reporter reads the consent that says the surgeon is a consultant, it leaves the office in a huff and, while hunched over the shopping cart they are leaning on to ease their pain, suddenly realizes that who the heck wants a surgeon who is not involved in researching the cutting-edge technology???

A very one sided article that does nobody in any role in the industry any good. $100 to make a pedicle screw, no discussion of what the cost was to get it to market....etc.No mention of patients that actually benefit from Spine surgery.... just a frustrating article to read. More of the same, will be easy to address in the field.

This is bad news for this industry yet again. When will all of these companies have to publicly share the amount that surgeons are being paid ? Every dollar reported, every company exposed... that will get rid of some trash, right? - Not some pseudo claim that a Dr is on payroll exceeding 5,000 dollars. How about Dr X is being paid this for designing this and gets paid more when something happens.

And let them wear those stupid company hats, and gloves and thyroid shields..... do you think outlawing that does anything???

How is Advamed responding? How are the hospital CEO's who give the surgeons operating quotas responding?? IT DOESN'T MATTER. THE SURGEONS ARE GOING TO ALWAYS BE VILIFIED. THIS IS TERRIBLE...... BUT NO MATTER WHAT, THIS IS NOT AS BAD AS KICKING THE BALL TO DESEAN JACKSON ON THE FINAL PLAY OF THE GAME. THE GIANTS JUST RUINED THEIR SEASON. WAKE UP NEW YORK IT'S OVER.

Medtronic owns 50 percent or so of the market... These Dr's might suffer and the surgeon community might as well... but the big dark machine trolls on.... stop using Medtronic and make a stand.

I read the WSJ article but didn't need it to draw my own conclusions about the excessive use of spine surgery to treat back & leg pain in the US. There are clear benefits to spine surgery for some portion of the patient population that acquiesces to such procedures but the financial incentives created by the healthcare system for a doc to operate vs. recommending conservative care are obvious.

Medicare Part-B reimbursements clearly motivate a surgeon to conduct surgery, which is why CMS has begun pilot programs on gain share, bundling and the Sunshine Act requires manufacturers to report payments beginning in 2012. However, Medicare only accounts for 25% of the market and reimburses hospitals are rates well below managed care terms. Pay-for-Play, Kick-backs, bribery, Consulting agreements, and the like are all the same thing and ultimately inflate to cost of care from a systemic standpoint.

There are certainly surgeons who strictly abide by the book of practicing good medicine and do not stray from their medical moral compass, and then there is everyone else. Examples can be found in most fields, it's just the spine industry is the 'soup du jour'. The danger of misaligned incentives or when a suspicion validates that 'smoke can lead us to the fire' prevails, the exception has become the rule. Is that the case here?

Without valid justifications for such outlandish payments to surgeons, the payments from manufacturers to surgeons are susupicious, at the very least. Nowhere in the WSJ article does it explain the basis for determining royalty payments by manufacturers and the same was true when DOJ investigated the ortho manufacturers that resulted in fines and settlements for five companies in 2007. Why don't the terms of payments to surgeons get disclosed? Wouldn't this address the very suspicion that is cited in the article of illicit arrangements, kickbacks, bribery? Wouldn't the very opportunity to increase one's income by performing back surgeries create a perverse incentive to overprescribe? Why isn't there IP to support the claims that these docs contribute to the innovative development of spine hardware backed by a mere 510(k) FDA notification? Why can't the WSJ explain the basis for these payments if they truly are legit? Interestingly, Dr Foley, a surgeon mentioned in the article didn't disclose royalties from Medtronic to a patient that is suing him for malpractice since the pedicle screws he used in the surgery, though made by MDT, were not invented by Dr Foley and earned him no royalties. The surgeon had also received $13m in the first nine months on 2010. Dr Foley also stated that "he has contributed to when they are implanted in patients by himself, members of his practice or hospitals where he has admitting privileges". This is one of the defenses used by Dr Foley and his attorney for nondisclosure of compensation between MDT and the same surgeon. Apparently, the royalties are not swaying him to perform surgery (I guess) that went awry. Even if they did, he doesn't get paid for any (undisclosed) inventions or contributions because he doesn't use them anyway! So, remind me why he is getting paid by Medtronic? This is really as clear as mud in my mind.

Your opinions are what most of us believe with a few minor deviations. But let's be honest, the Louisville 5 vilification is a by product of the abuses that exist in the system. The only answer is complete unadulterated transparency. It would save everyone time and money. Unfortunately, everyone likes gamesmanship, especially Senator Grassley and NASS. This type of publicity does more harm to the industry as a whole because it does take the spot light off of tort reform, and makes us look greedy, while the powerful insurance and bar association laugh all the way to the bank. With Hawkins decision to exit, it will be interesting to see the next corporate wonk that takes over. Who knows maybe he'll write a book like George did and pontificate on leadership.

How many spine surgeons does it take to screw in a light bulb? Right. So MDT has used patents from multiple multiple surgeons to develop a cervical plate, and pays each of them a healthy royalty. Come on people, it may the time to believe in Santa, but this is too blatant even for him.

10:59. you are so right. The financial incentives are so important that the rate of surgery in the US is 2.5 times higher than in Western-Europe. And before the nay sayers shout that European social medicine withholds treatment from people that need it, visit the countries and examine the systems: it just aint so.

8:16 made the funniest and most unfounded remark so far:"There is more Level I evidence supporting the effectiveness of spine surgery than in any other area of orthopedics, including hips & knees. I am not talking simply about "survivorship" - I am taking about all forms of safety, efficacy & QALYs."

What makes this sadly funny is that in no area of medicine the percentage of corporate sponsored publications is as high as here. Just go through the Medtronic registry (http://www.medtronic.com/about-medtronic/physician-collaboration/physican-registry/index.htm), which still appears strangely incomplete. Safely assume that articles written by people on this list are biased, as has been demonstrated multiple times, both in pharma and devices. Also assume that similar, but less rich lists exist for many other companies such as Zimmer, Stryker, DePuy, Nuvasive, Globus, Orthofix (Blackstone), Alphatec, and so on and so on. Once we have access to these lists and can compare the names to those of the authors of clinical studies involving devices, I predict that less than 10% of such studies are truly free of corporate influence.

I must agree with you that many people have made blatant statements about the delivery of healthcare in other countries without any knowledge or experience. It seems to work, as efficient if not better in many situations. Sooner than later someone will be ranting about hip replacements in Canada, yet, if its socialized medicine is so bad, why do many of these countries end up being the proving ground for US product development? Of course its the FDA's fault. Pity some of those poor people. But isn't this the American way? It is better to criticize something that you have never had to experience or use, than to try it. As someone so eloquently posted "most people wouldn't know socialized medicine if it was crawling up their tuches." Now TSB must relinquish the filibuster to his rant, and allow the John Galts of the world to wallow in their Randian BS. No one ever said that we were an intelligent society, did they? And the cost of delivering healthcare just keeps going up. Every dog has its day.

Who’s to say from behind closed doors – the surgeon gets with another surgeon and says, “Use my products and I will use yours”. Therefore, they both distribute the wealth from royalties. Another “flea flicker”? I agree with paid consulting agreements for better patient outcomes, but NOT ROYALTIES. Just sayn’. SS

Hawkins didn't leave MM...he was kicked out. The only problem was it wasn't soon enough. He hated the spine division with a passion and could never get away from the Kyphon albatross. Congrats to him for preventing his arch enemy Bill Weldon from picking it up.

I agree this article is very bad for the industry but the dirty deeds done dirt cheap in the early days of Danek must now be paid up.They will shoulder the Billion dollar fine levied against the "industry" and then all will be right again.

7:14 - You're almost describing how the POD model works in most parts of the country. One doc in Utah calls his doc buddies in Florida, New York, Texas, etc. and gets them to invest. Sure, they won't get paid on what they put in, but on what everyone else puts in. So there's a wink, wink and an urge to do your part.

8:16, your statement "There is more Level I evidence supporting the effectiveness of spine surgery than in any other area of orthopedics, including hips & knees. I am not talking simply about "survivorship" - I am taking about all forms of safety, efficacy & QALYs." is one of the funniest one I've read in a long time.

Let's first take all the names of the well paid surgeons from Medtronic's registry, add those that we know have so far escaped mention (for example Boden), and than add the names of surgeons we all know would be on such a list if published by Stryker, Zimmer, DePuy, Nuvasive, Globus, Synthes, Orthofix, Alphatec and all those other companies.

The resulting 'all companies' list would be pages and pages and pages long.

The next step is to make a list of all the authors of key clinical studies that provide all that so-called Level I evidence. This list, surprisingly, will not be that long. The common and well-known names are either very productive or have a very effective support system.

The logical next step:

Both lists are cross-checked, and it is virtually guaranteed that only a small minority of the key studies (5%, 10%??) were done and published by individuals who are NOT on the 'all companies't list.

Over the past decade it has been shown again and again for both pharma and devices that studies performed by individuals with financial interests invariably have much more positive outcomes for new therapies and implants than truly independent ones.

All this has been going on in spine for so long that everyone who is closely involved does not notice the smell anymore, but really, it stinks.

I don't really "have a dog in this hunt" but as an outside observer I really feel bad for some of the salesmen in this industry. I know the market well and have worked with dozens of spine surgeons in different parts of the country and they ALL are looking for ways to cash in! They feel like they are being left out in the cold if they do not at least have a consulting agreement, POD or some sort of royalty payment. I cannot say as I wouldn't do the same if I were in their shoes either. It is not enough anymore to sell a spine product per se, but you must also show the spine surgeon how he (or she) will personally profit off of it. Tough gig, especially when you consider the fact that you very well may be inviting investigations, lawsuits, and even jail time fot both you and tour docs!

8:16 what a typical warped physician perspective - totally self-centered around greed. Yeah lets take the tax dollars out of TSA and defense so that CMS can pay you more. afterall you guys do such a great jobdelivering 60%-75% functional improvement. You have great plans for America. Let's see, $7M to the Louisville 5... nothing wrong with that at all....riiiiight! I sure that they used Medtronic 100% of the time because Medtronic had the best technology for their patients. What a joke! How about giving free enterprise a chance. You know the lifeforce of capitalism.

Regarding your hypothetical scenario. Given the choice btwn conflicted surgeons or non-conflicted surgeons, I would rather live with the pain and go see a chiropractor thank you. 8 out of 10 surgeons are hacks. Look at the numbers - ASD is 30+ % in lumbar spine & 26% in cervical. A nice annuity if you ask me.

To 1:51. Nobody will come out smelling like roses, except the companies that are too small, too poor and sometimes even too ethical (yes, there may be one or two individuals left with moral compasses!) to play the game.

Question: How many spine surgeons does it take to change a light bulb? Given the number of them that receive royalties from MDT for having helped design something as complex as a pedicle screw, quite a few.

How many hire family members of surgeons or pass them on to the distributors to hire...Time for change and lots of you turds need to be flushed. How do you look in the mirror everyday and justify it with some pathetic "every company is doing it." Your days are numbered and we know who you are...

MM, The wall street article lacks proper historical perspective. In 1997 the industry was just recovering from the Pedicle Screw lawsuits. Which ended by the way when Depuy/JnJ sold out their surgeons and settled and Sofamor Danek/Medtronic fought every suit and won.

Second, and more important how many accredited spine fellowships were available in 97? Very few. How many are ther now? Too many to count. Neuro surgeons in 1997 barely used instrumentation and now most do.

Point is that the 400% growth in the past 13 years has numerous factors, including general population growth. I'd like to know the increase of board certified ortho/neuro spine doctors in the same 13 years.

Finally, I have never met a doctor that makes a patient have surgery. It is a mutual agreement between two people. As long a people consent to a procedure this will all continue.

The scariest aspect of your statement is that all these fellowships have turned into breeding grounds for companies that subsidize them one way or another. In addition to training future hack, the professor is teaching the pupil the art of the deal. I once sat across from a Program Chair who attempted to negotiate a deal between the company I represented and the University he worked for, upon listening to this bonafide drunk's psychobabble I asked him, what is it that he wants in exchange for their business? A drug induced look came over him as though no one ever blatantly called him out on his request for a kick back. As for surgeons never talking patients into surgery, can I introduce you to a few? Let's face it the spine industry has become every spine surgeons crack house, just look at some of the usual suspects, Yuan, Hochschuler, Vaccaro, Wang et al. I'm sure that there are many more disciples following in their footsteps.

TSB,, you couldn't have summed it up better in your post above!! I'm not sure why everyone is sooooooo taken aback by today's article when all it did was spell out what everyone knows to be fact in this industry??

Someone once said it best this way,, "The more things change, the more they stay the same".

MM, get Jon Stewart's man parts out of your mouth and quit bringing politics into your posts. You know, the IRS will take personal checks for more than they are owed. If you think the government is a good stewart of funds and others work just as hard as you but somehow "got a bad break", don't you owe them everything that you don't need to survive?As for socialized medicine, do you think there will be better access to care? Will more people be willing to risk capital to do R&D? Will our best and brightest people be clamoring to pay $100s of thousands of dollars to go to med school?I gaurantee companies don't use other countries to gather data because there care is better, and to say as much proves your ignorance. They do it because the FDA is yet another example of why the government is incompetent and should stick to the roles assigned to them in the constitution.

"Which ended by the way when Depuy/JnJ sold out their surgeons and settled and Sofamor Danek/Medtronic fought every suit and won."

It was not DePuy/JNJ, but AcroMed, pre-acquisition. The settlement they negotiated absolved all surgeons and their organization from all law suits as far as they were based on the use of the non-FDA cleared screws. What remained was plain good old malpractice, if that was part of the suit filed.

AcroMed was singularly inept at explaining the settlement to surgeons and the public. During the same time, SD had been trying to reach a settlement as well. Since they were bigger and richer than AcroMed they could not get a deal they liked. So instead, they used AcroMed's ineptitude to communicate and distorted the facts in a marketing blitz krieg. The above post 13 years later shows how successful they were.

The following quote comes from an email decree today (Subject Line: 2010 Record Close) from high atop the purple thrown at our industry’s fastest growing competitor:

“This week Medtronic announced their CEO is stepping down…or whatever. Spine is under fire from the insurers and yet we continue to provide innovative products and steward good surgery helping patients achieve better and better outcomes……..We will win the war, let’s send everyone a very clear message in the industry!

Adversity causes some men to break; others to break records…William Arthur Ward

As we close in on the last few selling days of the year, I wanted to remind you of the opportunity and challenge that was given to each of you in the Grand Finale Promotion.

Now is the time to continue to press forward and stretch yourself to achieve those goals. The stakes are high as well as the rewards.

Leave no PO unclaimed and no capital/bulk order not asked for. Stretch yourself past your limits and close out 2010 with an exclamation point!”

The lack of maturity, professionalism, and ultimately leadership emanating from this drivel should give everyone in this industry pause; causing them to reflect, honestly, on EVERY stakeholder’s role in this conundrum. Wake up Sales “Professionals!” This is the sound of your proverbial cheese being moved to the edge of a very steep, slippery and unstable cliff ledge.

As long as we can count on, rationalize, and continue to embrace desensitized and unempathetic responses like this from our senior level executives, no progress will be made toward restoring our credibility, rebuilding our reputation, and ultimately salvaging both our industry and our careers.

Thank you for the most rational comment ever made by a blogger. Our CEO's will sell each and everyone out for the Almighty $$$$$$$$. They are no different than the blood sucking politicians on Capitol Hill. The reason this drivel exists is because our CEO's are the Crack Dealers of the industry. The addict surgeon is expecting sham consulting deals, royalties on a me too idea, and only interested in padding their own wallets like the spine cartel. You're just a pawn in a game of Chess, easily replaced buy the next fool chasing the American dream, by the way that doesn't exist any more except for the top 2%.

Unless you're missing a bonus by hundreds of points, take it easy the next week and enjoy your life and family because the dirt bag that you work for could care less about you and your loved ones, it's all about the Benjamin's.

Back to the original topic, lets examine this WSJ scenario a little more closely. We all know surgeons and we also know that most surgeons either: 1) Lack the interest, talent or motivation to spend time developing a "new" product or 2) Don't do several hundred lumbar fusions per year. Based on this, how can it be possible that every member of a group, that happens to do the 3rd most lumbar fusions in the nation, all have intellectual property that is marketable?

My experience is that when a company decides to build a new product, they set aside a certain amount of IP they will pay to whatever surgeon panel they recruit. Then they decide who they want to be on board, and the decision is based less on IP than surgical volume.

I know that Larry Lenke is an extremely talented surgeon and is moving deformity surgery forward more than anyone else right now, but how much IP could he possibly contribute to the Legacy system that differentiated it that much from M8? The instruments were nicer, but not functionally different. The implants were marginally better but the changes were made by engineers, not Larry Lenke, to address cross threading and head splay. So why pay him millions of dollars? I think it is because he is seen as the leader in deformity and all of the visiting surgeons and surgeons reading his many studies will know he uses Medtronic and they will follow suit. But that doesn't really justify paying him a royalty.

The same holds true for the 5 surgeons in the WSJ article, except they are less well known and only offer volume. I can virtually guarantee you that they didn't spend a proportionate amount of time or offer any game changing ideas in exchange for their $7 Million. And the word on the street is now that they have their hooks into MDT for royalties, they still get paid even as they move on to another IP project with another company. That would make an interesting follow up article.

If any of you have looked over the disclosure page on MDTs website, it seems odd to me that almost ALL of the royalty payments are to surgeons in the spine field, not in cardiac, ENT, diabetes, neuromodulation, etc. Is that a sign that spinal products rely more heavily on surgeon involvement, or just a sign that the spine industry plays by different rules?

Correction to your post...To find the answers find the best doctors...and Larry Lenke is that. As a parent I am thankful Medtronics collaborates with an industry innovator and leader. That is a win win for everybody, but especially my daughter who was FORTUNATE to be operated on by Dr. Lenke. Tom Robinson, Maryville, Tennessee

Somewhere in the evolution of this industry, surgeons started to believe that they were the rainmakers when it comes to bringing a product to the market place. With the exception of a few, most don't have the time or wherewithal to take a product from concept to commercialization, nor do they want to spend their own money. How many of us have been approached by a surgeon interested in a consulting agreement with nothing to offer except his volume. How many changes can one make to an instrument? How many surgeons do you need to design a cervical plate, pedicle screw and or piece of PEEK? The most interesting aspect of the Louisville 5 is that up until the WSJ article, TSB rarely if ever heard of these docs. It's not like they belong to the cartel that has tainted and robbed this industry of its reputation, yet, there is a whole underworld when it comes to these types of deals. Surgeons make a career out of using companies to pad their wallets, especially the early growth stage companies that are stupid enough to believe that the doctor is really interested in their product when in essence, they are only interested in the money.

TSB,, Great points above. How about the surgeon called out in the WSJ article for holding stock in 26 or 28 spine companies?? Where is he?? I doubt that he's purchased stock in that many companies and would also be interested to see how many of those companies are currently publicly traded or simply doing all they can to come to market and he's simply holding a stake hoping to cash in if they do.

To add to your comment- How does this surgeon practice medicine dipping his hands in all these companies? Last I checked, there are only 24 hrs in a day.

“No greater opportunity, responsibility or obligation can fall to the lot of a human being than to become a physician. In the care of the suffering, she needs technical skill, scientific knowledge, and human understanding. She who uses this with courage, with humility and with wisdom, will provide a unique service for her fellow beings, and will build an enduring edifice of character within herself. The physician should ask of her destiny no more than this; she should be content with no less.”- Tinsley Harrison

If companies are paying surgeons the big bucks, whom do you think is driving up the cost of delivering healthcare? Of course Dr. Famous, a Randian disciple at heart, will say it's big government, the FDA etc.... Free markets only exist as long as they don't effect the surgeons reimbursements. .But where does $7 million come from? The Dr. Steinmann's of the world blame the sales people, because they are driving up the cost of delivering healthcare and bring no value. If Steinmann had any balls, he would talk about how AAOS, NASS, and ANS should do a better job of policing themselves, the gutless prick. Like TSB has said before, if Dr. Famous has really invented a product or truly worked on a project he deserves to be compensated. But how many of these BS type of deals exist? You be the judge.

MM, the answer is simple. In the final analysis every single dollar going into a surgeons pocket, whether a fee for service, a royalty, a consulting fee, a travel stipend, a comped meal, a free ticket, or even stock, comes out of the pockets of the american patients and tax payers.

What needs to change is surgeon's self-image. Yes, they work hard, yes, they have great responsibilities, yes, it took time and money to get where they are, and they should be paid well for what they do. However, being paid well is not synonymous to a 7 figure income, which many seem to consider the norm.

What also needs to change is that the more you cut, the more you make. That is the main driver behind the too high rates of surgery in this country. In an ideal world physicians would be paid only by their patients that are healthy, and not the sick. The healthy are the ones who can work, and can make the money to pay them. Such a system would be a great incentive to ensure that every single medical intervention is actually aimed at making the patient better.

MM- let me put a scenario forward to you that has actually played out numerous times:

Newco has a me-to spine line that is not fancy, and simple enough that any spine surgeon can use it without a sales rep in the room to hold his hand.

Newco has touted that this 510k approved spine line is 1/3 the cost of comparable products, no drop off in quality (PEEK cages and titanium screws)

Newco explains the cost savings is a result of manufacturer to hospital (cutting out distributer and/or sales rep) direct product.

Hospital says "we love it, buuuuuut, our surgeons will never go for that! They make waaaaaaay too much money putting in hardware for their existing company!

And on top of that MDT, Stryker, Synthes, Depuy et al. have volume based quotas that we as a hospital must collectively reach in order to:1) collect our rebate at the end of the year2) keep our existing price structure from going up

Then the hospital says, "but go speak to our GPO and get on with them, then maybe we can talk"

GPO says "How much are you willing to pay us to be listed?" "If you pay up big bucks now, we will add Newco to the new spine contract ASAP, if not Newco will have to get in the back of the line and apply when we review the contracts in 3 years"

How many spine surgeons do you think are out there that would say, "you know what I am going to do my part to reduce the high cost of healthcare"

Don't worry all you sales reps out there, your jobs are secure.....at least for now! All bets are off though once the hospitals have employed all the spine docs.

How many surgeons would work for lowering the cost of implants if the government would actually pay surgeons a legitimate wage(maybe some)? Even more so if the device cost affected their paycheck directly(alot more)? Lump surgeons and the implant cost in the same pool of money. That is capitalism. Currently, the surgeon does not have a vested interest in the device he chooses to use and by structure is a consumer without being the payer(more like socialism). Thus, Device Co's will continue to leverage kickbacks, consulting agreement, etc to affect the market with little the system can do to prevent it because it is not capitalism. The consumer is free to make choices with no financial impact on themselves!

BTW, There is even another 25% medicare cut lingering that will eventually come. What do you expect to happen then?

I have dealt with GPO's and that is another big scam. They are definitely not looking out for lower patient costs. I have literally had a purchasing agent at a hospital tell me even if we gave the implants to them free he couldnt do it bc they are equity owners of HPG, then he backtracked and said well maybe not free but you get the point. So, with everyone in line to grap a piece of the patient charges no wonder our healthcare system costs are out of the roof. Final note, once I retire or hit the lottery I do plan on blowing the whistle on that prick. :)

Perhaps some of the IP that isn't mentioned is what the uber-productive research staff at the institution in question puts out in the peer-reviewed forums.

I am a researcher and publish/present regularly on lumbar fusion, sometimes with a device co at the helm, sometimes not. I know some of the surgeons at hand because they (and their institution)is a research powerhouse, and in my experience there has been no shortage of resources available to those who provide peer-reviewed support for device co's products and respective procedures. Level I evidence is quietly becoming part of the lifeblood of spine, and I surmise this accounts for a lot of the moneys described by WSJ.

I love the sideline players comments, all I was doing was making a point about gpo's. I made an adjustment and still kick Danek, Stryker, Synthes and Depuy azz in my area and the companies I sell are smaller companies and none of my docs are on consulting, royalty deals, they are too ethical for that bs.

I think that 8:59 summed it up very nicely. I am amazed that I have not seen the rebate issue discussed more on this site. A percentage goes back to the hospital based on meeting key revenue targets. I have never seen it earmarked for the department that is generating it and therefore nothing to the patient... Really ??

8:59 you may be right but only to an extent. Commoditized, open fusion products may warrant price decreases but consider that 85% of cases are still done open. Consider all the additional cost of open surgeries, longer hospital stays, meds, infection(reop). The QALY's on open procedures will be called into question(see BC/BS NC white paper citations).

However, perc screw systems do not have the type of parity that open systems do. I believe a combo of safe lateral and perc constructs and effective posterior mini-open, perc constructs will hold value and will most definitely demand representation. Can you imagine a circulating nurse trying to fumble around with a Sextant system?

And when that market approaches competitive parity, then you may see TDR's with axial cushion plus less bulky facet reconstruction begin to creep in finally. The point is the GPO's, Hospitals, POD's can target a market that is experiencing a technology stall but it will be short lived. Wasn't 10 years ago Stryker reps were schlepping monoaxial Diaposon and Halifax clamps...

For those of you who are spine surgeons and receive compensation from the device manufacturers (royalties, consulting, etc), would you kindly speak up and shed some light on this debate about unethical remunerations from the suppliers? Don't you wish to exonerate yourselves of these ostensibly dubious practices? I've been following this lengthy blog that the WSJ article finally published and am more concerned than ever by the appearances of such shady business arrangements between docs, hospitals and device compaines. Yes, I believe the government is as much to blame for these systemic shortcomings that have effectively left the taxpayers to foot the bill. How the hell can there be so much corruption at the expense of the very patients who need medical attentions! Don't docs take classes on ethics in medschool? Aren't most of us taxpayers? Who ultimately gets hit with rising insurance premiums? We all have vested interests here, but there seems to be quite a bit of hypocracy here.

I really do feel sorry for the doctors who are genuinely treating patients in the name of good medical practice. For those of you who are doing what you do for personal enrichment, in front of the name of medicine - F--K you! I'd rather not generalize but there's such a lack of virtuous defense of the docs throughout this thread of communications that I'm inclined to believe that the spine industry is rampant with deceitful con artists. If this isn't true, please speak up, please! I'm all ears.... TSB, maybe you can enlighten me? I'm too young to be a cynic at this point of my career.

There are many reasons why spine surgeons will not speak up on behalf of the art, regarding the kind of remunerations that the WSJ called into question. The primary reason is that they have their own Omerta, a code of silence when it comes to their dirty little secret. Your choice in using the word dubious is generous, when criminal may be more appropriate. Most of us long-term tenure in this industry have the utmost respect for surgeons that hone their craft in the name of a good and ethical practice. We respect the value and service that they provide society. Surgeons must be compensated equitably, but there must be balance and boundaries, something that rarely exists. When it comes down to compensation, the word Merit, is non-existent in their lexicon, because the industry as a whole panders to their greed. Unfortunately, it has become sport to game the system, we really don't behave all that differently than the sub-prime market did when they gamed the system. Today healthcare at best resembles a Ponzi Scheme with layer upon layer with one intent, to get new investors to come in while those in control pull as much capital out of the system before the industry has to realign itself because of a collapse. It has become in vogue to blame the government and rightfully so, but its easier to deflect blame on everyone else by playing the role of Nell Fenwick to Snidley Whiplash. And who pays the price? The patient. How many surgeons does it take to provide excellent feedback in designing a cervical plate, or pedicle screw? A rod reducer? A locking mechanism? A retractor? Most designs are near completion by time they get to a consultant. Never have I witnessed a surgeon sit with an engineer using CAD to model a product or modify a design. How can you not be cynical, just look at the role models, you should know who they are, selling you the next new new thing. So don't be so surprised by what you read it's not jaded opinions, it's the truth, it's real, whether you like it or not. Your choices are that you can work to live, or live to work, the choice is yours.

interesting they don't show spine hardware -- only "latest" use of pacemaker for spinal applications--blatant misdirection--Norton Healthcare statement -- do they really know what "ethical standards" are? These guys got handed a check for millions with a "wink and a nod" a few years ago for their "ownership" of certain IP--they continue to receive their "royalty" (read bribe) essentially for being high output users -- and now they think they deserve it--and their hospital is standing by them--just like Zdeblick's hospital--I don't know who is more culpable in this practice--the greedy, arrogant docs or their affiliated institutions

Thank you TSB for your candid and eloquent response to my quest for truth about the spine business. As an investor, aiming to value publicly traded spine companies within the realm of healthcare companies, I get it. This business is a structural “short” position.

As of the spine surgeons (presumably, 8:14am & 8:50am), thank you for stepping up to the podium and revealing your true values – I pity your patients. Merry Christmas to everyone else.

Most of you guys are soooooo pompous. MM, you are a damn socialist. Go to youtube and look-up the Milton Freidman/Phil Donohue interview from the late 70's. It is so appropriate. You will all finally understand why we need less government in this process, and why the market forces found in a free, capitalist market will work this out. Quit trying to invent a better moustrap. For once in the last 40 years, let something (economically) run it's course. We have been in the habit of hitting the panic button at the first sign of trouble, rather than letting the system that built the greatest, most affluent society the world has ever known, do it's thing. If surgeons, companies, or reps are found to be breaking the law (the existing law) then they will be dealt with in time. We need to resist our need for immediate resolution and immediate gratification.

Enjoy Christmas, and the break that you all hopefully get, then get your asses back to work, and help get this country back to prosperity.

9:48 you are a shitty investor if you are banking on the slanted views of the tsb...what companies, roles, leadership positions, what legal issues yada yada yada has tsb dealt with at the round table. tsb is a conspiracy nut which contributes to his liberalism.

TSB, continue your good work. 1:14, 2:38 and like-minded conservatives will be silenced once the free market forces and lack of law enforcement will have led to the factual take over of this great country by the Chinese and Indians.

Hey 2:38 - can I sell you a block of shares in Medtronic, Nuvasive and Synthes at Market price? I'll buy it back from you in five years as a Christmas gift to myself. Then we'll talk about who's the shitty investor. And your gift? well, I'll send you a copy of "Atlas Shrugged". Merry Christmas everyone! It's time to spike some eggnog!

rookie, get back to the books synthes doesn;t have stock for you to sell me... see this is what i love, idiots speaking up and not knowing when they put their foot in their mouth... i love it, and thats why docs hate a lot of you, bc u sound ignorant. if you are a liberal, you have a big problem with yourself and what america was built upon. happy holidays. it would be cool to hear what you predict mdt and nuva will be selling at in 5 years. enlighten me rookie...tell me something i don'tknow.. yawn yawn.

Your statement, "Never have I witnessed a surgeon sit with an engineer using CAD to model a product or modify a design," is really the giveaway. Real innovation and development events certainly never occurred in your presence because you are a douche. I am guessing you had a cup of coffee with a device company, were properly vetted and then promptly flushed.

To carry on that surgeon-device maker synergy is some sort of myth is goofy. The fighter pilots give the aeronautical engineers the skinny and then they get back to the DRAWING BOARD. No one other than those that are in situ and can properly communicate to those that are ex vivo, you doucher.

You must be same ahole to continue posting your non-sense on this blog, it must be tough being as smart as you are based on your limited vocabulary. Give us all a break go home open a can of beer, beat on your wife, kick the kids and pet your dog. TSB's probably forgotten more than you'll ever know about this industry.

I agree with 5:20. MM is a feminine cleansing system. I think it is sad, and a little frightening that there are several of you out there, that back him up, and hold him in such reverence. I am a little embarrassed when I think that I compete with, and actually lose business to some of you shmucks. To those of you that get it, and are thankful for the liberty and opportunity that this country affords, good luck in the new year. You will certainly outlast the skidmarks that spew their liberal discharge on this blog. They are surely the same sleaze that lead with payola for their prospects.

Are you teaching your children Chinese? Will you be getting your knees replaced in India? Did you notice your right wing friends roll over for DADT, unemployment, START all for the love of the Almighty $$$$$$, they had to be embarr assed into voting for the 9/11 responders. Have you ever served your country? Or are you another loudmouth that hides behind his mommies or his wife's skirt when it comes to defending this country. Did you notice the socialism they provided for all your friends on Wall Street, you know the people that laugh at idiots like you?

There is a correction coming in this industry for sure. There are pretender docs, pretender manufacturers and most definitely pretender reps. I welcome it, frankly. Time to burn it down and let the new shoots grow. But I will tell you one thing: if you are of the belief that surgeon interaction with device manufacturers is unproductive then you have never been privy to real innovation, either because you work for a me-too outfit or you're a punk and aren't involved. Either way, the bashing that is happening here regarding development is absurd.

7:34, your POV is so tainted and skewed that it is tough to take you seriously. You clearly only read headlines or watch the mainstream news. It is obvious you don't get it. 5:20 is right: You are part of the problem, and impede democracy and progress (and to 7:54's point, probably innovation.)

TSB just came back from Santa's workshop to check in on the blog. Just a simple question for some of you. It's Christmas Eve, can you get off this blog site, go home, and spend some time with your loved ones, if you have any. If you're still spending commenting on the insanity of our industry, you have no life. It's a blog, don't put on your knickers too tight, it may cut off your circulation.. Merry Christmas, over and out. See you all next week.